The Lowdown on Hedge Fund Stock Positions

Each quarter, Goldman Sachs puts out an exhaustive research report on what their hedge fund universe is doing in the equity markets. The Hedge Fund Trend Monitor follows 700 funds carrying $1.25 trillion of gross long and short stock positions.

I’ve pulled a few nuggets I found interesting from the newest note:

1. Hedge funds hold 3% of all stocks, ETFs hold 4% and US households own 33% of stocks directly plus another 21% indirectly through mutual funds. Having not looked into those totals before, I was shocked at how relatively small hedge funds and ETFs are in the whole pie.

2. Hedge funds have been gradually shifting toward large caps for ten years now. This one is obvious, the funds themselves have gotten larger. Like mutual fund managers, the $5 billion-plus funds can’t really operate in small caps without moving the markets and being gamed by competitors. Here’s Goldman’s David Kostin:

“Roughly 47% of the aggregate assets of hedge funds was invested in stocks with equity capitalizations greater than $10 billion as of 1Q 2011, up from 35% in 2002.“

3. The typical hedge fund was operating at only 48% long as of the end of Q1.

4. The sectors that Hedge funds are the most overweighted towards are Consumer Discretionary, Technology and Energy right now.

5. The VIP List (stocks that appear most frequently as top ten holdings for hedge funds) has 15 new stocks this quarter. They include SSCC, BP, MRO, PCLN, VRX, TEVA, YHOO, CVX, MET, NFLX, MA, SINA, CHK, EQIX, and ESV. As good a place as any if you’re looking to learn some new names.

For all the insights from the report, you can head over to Zero Hedge below…